Financial standard OK'd

April 14, 1993|By New York Times News Service

The Financial Accounting Standards Board, on a 5-2 vote, approved a new financial standard yesterday that will force banks and other financial institutions to report profits or losses when the market value of many bonds in their portfolios changes.

The board also moved toward issuing another standard, one that would require banks to take losses when they renegotiate loans with troubled borrowers. It is hoped that final action on both rules will be completed by June 30, when the terms of two board members expire.

The bond accounting standard was approved when James Leisenring, the board's vice chairman, reversed his position and voted yes.

The FASB can issue rules only if at least five of the seven members approve.

Under the proposal, banks and other financial institutions that own debt securities would have to declare whether they intend to hold a given security until maturity. Unless they do so, they would have to report profits and losses when the market value of the bonds rises or falls.

In an informal vote, five members indicated support. A formal vote is expected within a few weeks.